In this article, we will take a look at the 12 best low risk stocks to buy in 2023. To skip our analysis of the recent market trends and market activity, you can go directly to see the 5 Best Low Risk Stocks to Buy in 2023.
It is imperative to understand the risk appetite before making any major investment decisions. Risk appetite, simply defined as the degree of risk an investor is willing to be exposed to, to achieve certain financial goals, helps navigate the vast ocean of investment options. Investors with higher risk appetites typically opt for riskier investments with the goal of achieving higher rewards in relatively shorter time periods. On the other hand, investors with low risk appetites try to get stable returns at low risk to their principal amounts.
In an article recently published on Insider Monkey, we discussed the best high risk stocks to buy now. High risk stocks for the list were selected on the basis of their beta values, among other factors, based on the hypothesis that high beta stocks have higher chances of outperforming the market in times of market recovery. Over the last 3 years, the Invesco S&P 500® High Beta ETF which tracks the top 100 stocks from S&P 500 index with highest beta, has performed significantly better than the S&P 500 Index, evident from the total return generated by the fund which amounts to 20.15% compared to a measly 10.15% for the S&P 500 Index.
Our list of 12 best low risk stocks to buy in 2023 has also considered other factors, in addition to the beta values, of the selected stocks that can suggest positive prospects for these stocks in the future. These stocks have strong fundamentals as well as benefit from positive analyst and hedge fund sentiments. The list is heavily dominated by companies from the healthcare sector, including medical devices companies as well as drug manufacturers. Notable names on the list include Merck & Co., Inc. (NYSE:MRK), Pfizer Inc. (NYSE:PFE), Abbott Laboratories (NYSE:ABT), and NextEra Energy, Inc. (NYSE:NEE), among others.
There are several studies that show that investing in low volatile and low risk stocks can allow the investor to beat the market. This follows the old adage ‘slow and steady wins the race’. A research report by AllianceBernstein says that an active investing approach which focuses on low volatility and strong fundamentals actually end up beating the market and performs better than passive investing approach that only takes in low volatility into account.
We shortlisted stocks with a beta value of less than 1.0, strong fundamentals, positive analyst ratings, and positive analyst price targets, as of November 8. We further narrowed down our selection by removing midcap or lower companies and stocks without stable and resilient dividend payout programs. The remaining stocks were ranked based on Insider Monkey’s database of elite hedge funds, tracked as of the second quarter of 2023. The top 12 stocks based on hedge fund sentiment, ranked in the ascending order of hedge fund shareholders, have made onto our list of 12 best low risk stocks to buy in 2023.
Agnico Eagle Mines Limited (NYSE:AEM) is a gold mining company based in Toronto, Ontario. With a history dating back to 1957, Agnico Eagle Mines Limited (NYSE:AEM) operates mines in Canada, Australia, Finland, and Mexico.
On October 25, Agnico Eagle Mines Limited (NYSE:AEM) released its financial results for Q3 2023. Its total revenues increased by 13% y-o-y to $1.6 billion, while net income surged by 167% y-o-y to $179 million. Agnico Eagle Mines Limited (NYSE:AEM) declared a quarterly cash dividend of $0.40 per share. The mining company has declared cash dividends every year since 1983.
As of Q2 2023, 42 out of the 910 hedge funds tracked by Insider Monkey were bullish on Agnico Eagle Mines Limited (NYSE:AEM) and held its shares valued at $718 million. Jean-Marie Eveillard’s First Eagle Investment Management was the largest hedge fund shareholder holding 6.3 million shares valued at $313 million.
Lehigh Valley, Pennsylvania-based Air Products & Chemicals, Inc. (NYSE:APD) is a leading industrial gases company with a focus on providing essential industrial gases, related equipment, and applications expertise to customers in dozens of industries. It also develops, engineers, builds, owns, and operates some of the largest industrial gas and carbon-capture projects.
On May 22, Air Products & Chemicals, Inc. (NYSE:APD) announced that NEOM Green Hydrogen Company, an equal joint venture between ACWA Power, Air Products, and NEOM, has achieved financial close on the world’s largest green hydrogen production facility at a total investment value of $8.4 billion. The project, located at Oxagon, in Saudi Arabia’s region of NEOM, is being financed with $6.1 billion non-recourse financing from 23 local, regional, and international banks and financial institutions.
Air Products & Chemicals, Inc. (NYSE:APD) has entered into an exclusive 30-year off-take agreement for all the produced green ammonia. The company is also the nominated contractor and system integrator for the entire facility.
Air Products & Chemicals, Inc. (NYSE:APD) has steadily grown dividends over the course of its history, with more than 40 consecutive years of dividend increases. The latest increase came in January this year, with an 8% increase in quarterly dividends to $1.75 per common share.
Eagle, Idaho-based, Lamb Weston Holdings, Inc. (NYSE:LW) is a leading supplier of frozen potato, sweet potato, appetizer and vegetable products to restaurants and retailers around the world. Its products are sold in more than 100 countries worldwide.
On October 5, Lamb Weston Holdings, Inc. (NYSE:LW) released the financial results for the quarter ended August 27. Its revenue increased by 48% y-o-y to $1.7 billion while net income increased by 1% y-o-y to $235 million. At $1.63, the normalized EPS for the quarter surpassed the consensus estimates by a whopping $0.55.
As of June 30, Lamb Weston Holdings, Inc. (NYSE:LW) shares featured in the portfolios of 47 of the 910 hedge funds tracked by Insider Monkey with the total value of shares held by these hedge funds amounting to $2.4 billion. Sharlyn C. Heslam’s Stockbridge Partners was at the top of this list with ownership of 3.0 million shares valued at $345 million.
Stamford, Connecticut-based Philip Morris International Inc. (NYSE:PM) is a leading international tobacco company with a current product portfolio primarily consisting of cigarettes and smoke-free products. Its products are sold in more than 180 markets around the world.
On October 19, Philip Morris International Inc. (NYSE:PM) released the financial results for the third quarter of 2023. Its net revenues increased by 14% y-o-y to $9.1 billion, while it generated a net income of $2.2 billion. The normalized EPS for the quarter was recorded at $1.67, which exceeded the consensus estimates by $0.06.
Philip Morris International Inc. (NYSE:PM) has a long history of regular dividend payments with 16 years of consecutive dividend increases. On September 13, the Board of Directors of the company increased the regular quarterly dividend by 2.4% to $1.30 per share. The shares of the company currently has a dividend yield of 5.76% based on the share price on November 8.
Juno Beach, Florida-based NextEra Energy, Inc. (NYSE:NEE), is a leading electric power and energy infrastructure company with operations in US and Canada. It has two major business segments: FPL, the largest electric utility company in Florida focused on generation, transmission and distribution of electricity to more than 5.8 million customer accounts; and NEER, one of the largest wholesale generators of electric power in the US with 24.1 GW of net generating capacity.
NextEra Energy, Inc. (NYSE:NEE) has steadily grown dividends over the course of its history. The latest increase came in February 2023, with a 10% increase in regular quarterly dividends to $0.4675 per share. The company intends to further increase its dividends by 10% annually, compared to its 2022 dividend, at least through 2024.
On October 25, Morgan Stanley analyst David Arcaro maintained an ‘Overweight’ rating for NextEra Energy, Inc. (NYSE:NEE) shares and lowered the target price from $91 to $79. The target price represents a potential upside of 38.99% based on the share price on November 8.
As of Q2 2023, 59 hedge funds tracked by Insider Monkey held shares of NextEra Energy, Inc. (NYSE:NEE). Ken Fisher’s Fisher Asset Management was its largest hedge fund shareholder with ownership of 9.7 million shares valued at $717 million.
Abbott Laboratories (NYSE:ABT) is a leading global healthcare company with a portfolio of products and services that spans healthcare, diagnostics, medical devices, nutritional, and branded generic medicines.
On September 22, Abbott Laboratories (NYSE:ABT) announced the acquisition of Bigfoot Biomedical, a leader in developing insulin management systems, as part of the company’s efforts to develop connected solutions for making diabetes management even more personal and precise. The terms of the transaction were not disclosed.
On October 19, Wells Fargo analyst Lawrence Biegelsen lowered the price target for Abbott Laboratories (NYSE:ABT) shares to $116 from $136 and maintained a ‘Buy’ rating. This followed the Q3 earnings release by the company, which managed to exceed the consensus estimates for both the revenue as well as normalized EPS.
As of Q2 2023, 62 of the 910 hedge funds tracked by Insider Monkey owned shares of Abbott Laboratories (NYSE:ABT). Its leading hedge fund shareholder was Ric Dillon’s Diamond Hill Capital with ownership of 5.1 million shares valued at $553 million.
Based in Dublin, Ireland, Medtronic plc (NYSE:MDT) is a leading healthcare technology company with a focus on providing technologies and therapies including cardiac devices, surgical robotics, insulin pumps, surgical tools, and patient monitoring systems, among others.
Medtronic plc (NYSE:MDT) is a part of the S&P 500 Dividend Aristocrats and has increased its dividend per share amounts for 46 consecutive years. The company currently pays a quarterly cash dividend of $0.69 which represents a dividend per share CAGR of 9% during the last 10 years.
On August 23, Mizuho analyst Anthony Petrone raised the price target on Medtronic plc (NYSE:MDT) shares to $100 from $95 and retained a ‘Buy’ rating on the shares. The target price represents a potential upside of 39.96% based on the share price on November 8.
According to the Insider Monkey data tracking 910 leading hedge funds, 63 hedge funds were long Medtronic plc (NYSE:MDT) as of Q2 2023, holding shares with total value of $1.9 billion. Its largest shareholder was Arrowstreet Capital with ownership of 5.8 million shares valued at $507 million.
